Equity MFs mop up Rs 46,700 crore through new fund offers in 2021

Highest in 10 years, with 13 of 70 equity schemes cornering 75% of amount raised

Buoyant stock markets and strong performance of equity schemes have led to equity funds mobilising Rs 46,752.37 crore through new fund offers (NFOs) in the current calendar year (2021, or CY21). The data from Value Research shows that NFO collection in CY21 was the highest in a decade, with 13 of the 70 equity schemes cornering 75 per cent of the amount raised.

ICICI Prudential Flexicap Fund and ICICI Prudential Business Cycle Fund were the top funds which collected Rs 9,808 crore and Rs 4,185 crore, respectively, in NFOs.

Asset management companies (AMCs) had collected the amount by launching schemes in various categories like thematic, multi-cap, banking, flexi-cap, and international funds.

Market participants say with equity markets doing well, investors have been looking to invest in mutual funds (MFs). Flows have been equally good in existing open-ended schemes as well.

In the past year, the S&P BSE Sensex Index is up 24.58 per cent, while the S&P BSE MidCap Index and the S&P BSE SmallCap Index have surged 42.84 per cent and 66.72 per cent, respectively.

Riding on strong equity markets, several equity fund categories have given average returns of 28-66 per cent in one year.

“Some of the NFOs were from established fund houses, which had launched schemes to fill in the product gaps. Many investors are excited about the NFOs rather than the old funds,” says Kaustubh Belapurkar, director–manager research, Morningstar India.

  

The number of NFOs for CY21 are till end-November. In the earlier calendar year, MFs had collected Rs 18,785.48 crore through NFOs. The data from Value Research shows that 2017 saw the second-highest collection of Rs 34,048.14 crore through NFOs in 10 years.

In CY21, 29 schemes were launched in international and large-cap categories. Most of the schemes launched in the large-cap category were passive schemes.

“Traditionally, we have seen investors having a home bias and investing only in Indian equities. Over the past few years, they have started adding positions in global equities,” said Belapurkar.

Under sector funds there were launched in the pharmaceutical and technology space. In the thematic category, most of the schemes were focused on the ‘business cycle’ theme.

Recently, Aditya Birla Sun Life MF mopped up over Rs 2,200 crore for its Aditya Birla Sun Life Business Cycle Fund, an open-ended equity scheme following the business cycle-based investing theme. During its NFO period, the fund also received more than 117,800 applications.

A Balasubramanian, managing director and chief executive officer, Aditya Birla Sun Life AMC, said, “A collection of over Rs 2,200 crore makes it one of the largest funds within this category of thematic scheme. Importantly, this collection has come in through a diversified channel — a reflection of our strong distribution network.”

With new players coming in and greater demand for passive products, market participants say NFOs will continue to garner money even in 2022.